Globe Scan : Modi goes to Tokyo

The trip to Japan will be Modi’s first significant overseas foray. Bonhomie apart, the visit holds significance for both Modi and Japanese Prime Minister Shinzo Abe

PRIME Minister NarendraModi is scheduled to visit Tokyo soon to meet with Prime Minister Shinzo Abe, signalling closer bilateral ties infused by personal chemistry and shared values. The Namo-Shinzo show will be an elaborately choreographed red carpet extravaganza to highlight the two leaders’ warm bonds; after all they are Twitter buddies and met twice previously in 2007 and 2012. They have exchanged election congratulations, seeing in each other an ideological soulmate and a ‘can do’ counterpart to work with.

This is Modi’s diplomatic debut, his first significant overseas foray, demonstrating that personal bonds make a difference in establishing foreign policy priorities. More important, they are both unapologetically pro-business and support welfare for the wealthy, doling out incentives and tax cuts that would bring tears to the eyes of any corporate titan. They are both ardent nationalists, embrace a more assertive and muscular foreign policy and they share the same star sign: Virgo.

It is rumoured that the celibate Modi is considered attractive to the opposite sex while nobody in Japan really wants to think about Abe and sex. Apparently, both are teetotallers. I consulted an astrological love signs website to see whether they are compatible and found reassuringly that, “they offer the same ‘virginal’ landscape [but] Virgo is a very sensual sign. Once there is intimacy, these two have the precision to satisfy, and open up to earthly pleasures together.” However, “Virgo’s dark side is the tendency to be the constant critic. Too much emphasis on the plans for progress can put them in high stress mode, and tax an already nervous system. It’s important for them to find ways to relax and be in the moment.” Sage advice.

When they are not chilling, these two Virgos have a lot to talk about—stalled negotiations on a civilian nuclear deal, arms sales, dealing with China, massive infrastructure projects and gender empowerment, Abe’s signature empty gesture.

Abe is also keen to develop the Quadrilateral Security Dialogue between Japan, India, the US and Australia that he helped initiate in his first term as premier in 2006-07. What does QSD discuss? It’s all about establishing a strategic counterweight to China, but operationalising this concept has been elusive. Not the least because India doesn’t have the capacity or inclination to serve as a strategic counterweight while Australia’s bottomless punchbowl of booming resource exports depends on China, and Oz is a long way away from the key flashpoints. But, India sees China cosying up to nemesis Pakistan through generous infrastructure and energy projects, while Modi has signalled that he is more hawkish on security, last year calling for fortifying border posts along the lengthy disputed boundary with China. He will also continue to support the Tibetan government-in-exile, so the chances of a Nixon-like breakthrough are limited. Modi may not prove as ardent a Cold War II warrior as Washington would like, but Abe will nurture a strategic partnership, with the two nations serving as bookends for the Arc of Anxiety China has created with its aggressive unilateralism and assertion of dubiousterritorial claims.

Modi and Abe both won elections promising economic revival. They are both wary about China’s hegemonic ambitions, but also eager to tap its enormous market potential. China is the largest trading partner of both nations. India’s trade with China stands at $66 billion in 2012-13, dwarfing the $18.5 billion with Japan, its 13th largest commercial partner; Tokyo’s bilateral trade with China exceeds $300 billion. So both nations have huge stakes in maintaining good relations with Beijing even as they seek to counter its strategic rise.

The two Prime Ministers, already Twitter buddies, have a lot to talk about stalled negotiations on a civilian nuclear deal, arms sales, dealing with China and infrastructure projects

Earlier this year Abe was invited to attend Indian Republic Day celebrations, but was unable to finalise drawn-out negotiations over a civilian nuclear agreement. Japan’s pitchman-in-chief is eager to conclude such a deal because nuclear energy sales are crucial to his plans to boost Japan’s infrastructure-related exports and because Washington has been pressurising Tokyo to overlook India’s nuclear tests and failure to sign the NPT. It was under the last BJP government that India conducted nuclear tests in 1998, derailing bilateral relations as Japan imposed sanctions and froze diplomatic exchanges. These were lifted in 2003 at Washington’s behest to “reward” India for its assistance in the “war on terror”. Since then India has been the largest recipient of Japanese economic assistance. President George W Bush subsequently signed a civilian nuclear deal with New Delhi and in 2008 persuaded other members of the international Nuclear Suppliers Group to end sanctions against India and provide it access to nuclear technology and equipment. This move to end India’s international ostracism over its nuclear programme was aimed principally at cultivating better ties and to nudge India towards becoming a strategic counterweight to China.

IT was also recognition of India’s enormous market potential for the NSG, given its ambitions plans to build lots of nuclear reactors despite strong local opposition. Japan is a key stumbling block in this scenario as its firms produce key components, but can’t supply them to pending projects without a civilian nuclear deal. Thus, contracts in India worth more than $60 billion are on hold because Japanese companies are major players in the global nuclear industrial complex; Toshiba-Westinghouse, Hitachi-GE and Mitsubishi-Areva are lobbying for the deal.

The key stumbling blocks from Tokyo’s perspective are India’s refusal to sign the NPT and its desire for permission to reprocess spent fuel. Abe may find it hard to “sell” this deal to the Diet if India balks at signing and insists on reprocessing rights. In May, the Asahi, one of Japan’s leading newspapers, voiced concerns about profits dictating foreign policy, stating that, “The Japanese government should not be lured by India’s huge market into rushing to strike a nuclear deal.” It added, “Tokyo should try to persuade the Modi government to join the NPT.” Good luck on that.

Last year Abe signed a deal with Turkey for $22 billion and agreed to allow reprocessing, but since Ankara doesn’t have a nuclear weapons programme this wasn’t an issue. I suspect that Abe will compromise and explain to Japanese politicians that other NSG members accepted India’s assurances to Washington about proliferation and weapons-testing so Japan should go along with the waiver and not stand in the way of a lucrative deal. His Liberal Democratic Party dominates the Diet and can probably overcome opposition to an agreement.

Modi and Abe both won elections promisin geconomic revival. They are both wary about China’s hegemonic ambitions, but also eager to tap its enormous market potential

THE final sticking point will be liability. In post-Bhopal India, liability is a volatile political issue and it remains to be seen how the BJP government will finesse it. When he was in opposition, Modi’s key Cabinet minister, ArunJaitley, questioned the legality of the ruse concocted by the Congress to address the nuclear suppliers’ liability allergy, but the burdens of power may cause him to reconsider. Nuclear vendors are relying on a clause in contracts signed with the Nuclear Power Corporation of India that is designed to insulate them from any right to recourse, a proviso that Jaitleyrailed against. Without an ironclad waiver on liability, however, most nuclear suppliers won’t proceed. As AV Ramana observes, “The nuclear industry doesn’t like this business of being liable for anything at all.” Indeed, but seeing as Tepco, the operator of the stricken Fukushima plant, has managed to offload most of its liability onto taxpayers and electricity payers, and nobody has been prosecuted for evident negligence, the risks seem manageable in the realm of power politics.

Abe is also eager to unleash Japan’s arms manufacturers on the global market and again India is a potentially big prize. Abe is promoting defence cooperation and arms sales, including Shin Maywa’s US-2 amphibious sea reconnaissance-and-rescue plane and is eying other lucrative contracts. He has been flogging submarines to Australia and India is another potential customer, putting some teeth into the QSD. Such sales are now possible because the government has comprehensively lifted the longstanding self-imposed ban on arms exports in a bid to boost production runs and thus lower per unit costs, enabling Japan to get more yawp for its yen. Given China’s galloping double-digit defence spending increases over the past two decades, this is a crucial consideration. Japan’s defence budget is about $50 billion a year while China’s is not as transparent, but is at least three times larger and probably closer to quadruple.

Modi might be interested in tapping Abe for economic advice as India has been weathering an economic slowdown and high inflation, but it might be a waste of time. Modi already has an impressive track record of helping wealthy businessmen get richer and ignoring the needs of the vulnerable and, like Abe, is a fan of what Arundhati Roy terms “gush up” economics. As with Abe, Modi’s election has boosted the stock index and, as in Japan, that ‘benefit” has bypassed most households.

What Modi needs to figure out is how to generate 10 million jobs a year, overcome widespread poverty, cope with the consequences of surging urbanisation, improve education and social services, boost a small and inefficient manufacturing sector, attract foreign investment, curb corruption and ease infrastructure bottlenecks while addressing gender, ethnic and religious violence and discrimination. Given this daunting ‘mission impossible’, it will be hard to resist the temptations of distracting the public by stoking Hindu nationalism and embracing a more assertive foreign policy. Playing the pride card has its uses and this seems to be what many Indians crave if only to erase memories of the rudderless and irresolute Congress-led coalition over the past decade.

ALAS,Abenomics is irrelevant to India’s challenges because quantitative easing on steroids would only fan inflationary pressures. There is some possibility that massive fiscal stimulus via public works would help address infrastructure problems, but how much can India afford to boost its public debt to GDP ratio without spooking investors? And Abe’s third arrow, structural reforms, remains a chimera, a grab bag of pledges that is missing in action. Where Abe can help Modi is with power, road and rail projects that could revive economic growth. So perhaps the best advice Abe can give Modi is in terms of PR, figuring out how to make ugly truths into beautiful illusions. But friends tell me that is precisely what Modi has done with his record in Gujarat so maybe his spin-doctors need no coaching.

Anyway, we wait with great anticipation the rightwing reactionaries’ upcoming reunion in Tokyo, evoking past splendour when Subhas Chandra Bose joined the Greater East Asian Conference held in Tokyo back in 1943. At the time, Abe’s grandfather, Nobusuke Kishi, was the wartime Minister of Munitions. Subsequently, he was indicted, but never prosecuted, as a Class A war criminal. Perhaps Modi will have time to visit Netaji’s grave and bust at the Renkoji Temple in Higashi Koenji, western Tokyo. There is also a plaque with a message in Hindi and Japanese by Atal Bihari Vajpayee commemorating his visit to the temple on September 12, 2001 (the day after the world would never be the same). The sign reads ‘Mujhe Renkoji dubara akar prasannta hui, jahan Bharatiya swatantrata sangram ke mahan senani Netaji Subhas Chandra Bose ki samritiyan surakshit hain’ (I am happy to revisit Renkoji for the second time where Indian freedom fighter Netaji Subhas Chandra Bose’s ashes are safely kept).